Current Long Positions (stop-losses in parentheses): XIDE (7.43), RPRX (6.31), TSYS (4.99), ECTY (2.96)

Current Short Positions (stop-losses in parentheses): None

BIAS: 18% Long

Economic Reports Due Out (Times are EST): ICSC-Goldman Store Sales (7:45am), Redbook (8:55am), S&P Case-Shiller HPI (9am), Consumer Confidence (10am), New Home Sales (10am), State Street Investor Confidence Index (10am)

My Observations and What to Expect:

  • Futures are slightly higher. 
  • Asia finished about 0.8% higher, while Europe is trading flat and mixed. 
  • Despite debt ceiling fears and mild sell-off, the charts on the major indices did not incur any technical damage. 
  • For much of the session, the market saw buying power come in yesterday, and finishing well off its lows. 
  • Volume remains well below average. 
  • The candle pattern formed over the last 3 trading sessions appears bearish to me, and my fear is that it could indicate a short-term temporary top. As a result, I believe it is very important for the S&P to break Friday’s intraday highs of 1346.  
  • After breaking Friday’s highs, the market needs to break 1353 on the S&P, which represents the descending trend-line from the 5/2 highs. 
  • S&P and other indices (more noticeably the Nasdaq), are forming inverse head and shoulders patterns dating back to May ’11. A break of the 7/7 highs, would confirm the pattern.
  • Market is entering Short-term overbought territory.
  • A big problem for the market would be a push below S&P 1323, which would hamper the market’s upward momentum.
  • Short-term market trend-line finds support today at S&P 1306.
  • My Conclusion: The market will continue to play to each and every press conference that the power players on Capitol Hill hold, I expect earnings to continue to take a back seat to the debt ceiling negotiations. 

Here Are The Actions I’m Taking:

  • Not the best day of trading yesterday – let gains in QPSA and LRAD slip away. Sold out of QPSA at $9.71 for a 1.7% loss, LRAD at 3.07 for a 0.33% loss, NR at $9.79 for a 1% loss, and XIDE at $7.65 for a 2% loss. 
  • Bought ECTY at $3.10, RPRX at $6.61, and TSYS at $5.16. 
  • Will continue to look for new long-setups today in the small caps breakouts. 
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas (as well as everyone else’s).